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Dow Jones NewsOct 1, 3:58 PM UTC
MW 'We believe we are in a stagflation period': U.S. manufacturers stuck in slump that shows no sign of ending
By Jeffry Bartash
ISM shows contraction for seventh month in a row
Farm-equipment manufacturer John Deere, an industry bellwether, is laying off hundreds of workers because of a slowdown in sales due to customer uncertainty as the Trump administration's tariffs take effect.
The industrial side of the U.S. economy contracted in September for the seventh month in a row, the Institute for Supply Management said, as companies struggled to cope with high tariffs, rising prices and reduced demand from customers.
Most manufacturers have responded by scaling back production plans and reducing employment to contain costs.
The ISM manufacturing index inched up to 49.1% in September from 48.7% in the prior month. Any number below 50% signals contraction.
The ISM surveys executives every month about how their businesses are doing.
'We believe we are in a stagflation period where prices are up but orders are down due to tariff policy, and ... customers are not willing to pay the higher prices, so they are just not buying.'Transportation equipment, as executive cited in ISM report
"Business continues to be severely depressed. Profits are down and extreme taxes (tariffs) are being shouldered by all companies in our space," said one executive at a maker of transportation equipment.
"We believe we are in a stagflation period where prices are up but orders are down due to tariff policy, and, again, customers are not willing to pay the higher prices, so they are just not buying."
Key details: The index for orders, a sign of future sales, fell back into negative territory. Orders have declined in seven of the last eight months.
Employment has contracted for eight months in a row. Only one of the 18 manufacturing sectors tracked by ISM increased employment in September.
Prices of raw materials and supplies rose for the 12th month in a row, reflecting higher prices for steel and many other commodities.
"Steel tariffs are killing us," said a senior executive at one manufacturer.
Big picture: Don't give too much weight to the latest ISM manufacturing index moving closer to the 50-yard line, so to speak. A roundup of comments from top executives painted a grim picture of how tariffs are hurting their businesses - and the U.S. economy.
'Business is slowing down.'Plastics-manufacturing executive, as cited in ISM report
"Business is slowing down," summed up an executive at a plastics manufacturer, echoing comments from leaders in other industries.
Looking ahead: "The feeling [among manufacturers] is nothing has changed, nothing has improved," said Susan Spencer, chairwoman of the ISM survey.
Market reaction: The Dow Jones Industrial Average DJIA and the S&P 500 SPX reversed early Wednesday declines by midday and remain near all-time highs.
-Jeffry Bartash
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10-01-25 1158ET
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